ZTE has lost at least CNY 20 billion (USD 3.1 billion) from the US ban on exports to the company, as clients pull out of deals and expenses mount, people familiar with the matter told Bloomberg. However, it has a restart plan in place to pick up operations again quickly if the US government softens its stance.
The plan dubbed T0 would put idled factories into action within hours once Washington agrees to lift its seven-year moratorium on purchases of American chips and components, according to the report. The company declined to comment.
At a summit with the South Korean president on 22 May, President Donald Trump said he’s reconsidering the US penalties as a favor to Chinese President Xi Jinping and may instead fine the company more than USD 1 billion.
However, some members of Congress continue to resist such action, and the Senate Banking Committee was the latest to pass legislation calling for increased scrutiny of foreign companies buying American technology. Senator John Cornyn of the Banking Committee also led a group of 27 senators in a letter to the Secretaries of Commerce and the Treasury and the US Trade Representative calling for them to reject any proposal to soften restrictions on the transfer to China of US-made technologies and "not to compromise lawful US enforcement actions against serial and pre-meditated violators of US law, such as ZTE."
The US action has spooked potential clients of ZTE and even prompted some to renege on agreed deals, the Bloomberg report said. ZTE’s spending an estimated CNY 80-100 million in daily operational expenses still, while most of its 75,000 employees sit idle.
It’s unclear what ZTE can do to prompt a reprieve, though it’s expected to reshuffle executives and possibly its board. Chinese government officials are undertaking negotiations with the US on behalf of ZTE, and the company, which doesn’t have much influence in the process, will have to accept the terms of any settlement reached between Beijing and Washington.
